The Must-Know Tax Exemptions of 2015

Almost all taxpayers are entitled to some type of tax exemption. For example, individual filers can generally claim one personal tax exemption while adults with children who live with them can take additional exemptions. Below introduces the must-know tax exemptions of 2015.

Standard Deductions and Personal Exemptions
First, there are changes to standard deductions. The standard deduction for single and married people filing separate returns will rise to 6,300 dollars. The standard deduction for married couples filing jointly will increase to 12,600 dollars. The standard deduction will be slightly raised for heads of household, going from 9,100 to 9,250 dollars. Second, the personal exemption for singles is being raised by 50 dollars, which puts it at an even 4,000 dollars. However, the personal exemption begins to be reduced at individual income levels of 258,250 dollars, or 309,900 dollars for married couples filing jointly. The personal exemption disappears at 380,750 dollars for singles, 432,400 dollars for married couples filing jointly. Finally, the 2015 limitation for claimed itemized deductions for individual returns will start with incomes of 258,250 dollars and for married couples filing jointly it will start at 309,900 dollars.

Additional Tax Exemptions
In 2015, the Alternative Minimum Tax (AMT) exemption amount will be raised from 52,800 dollars to 53,600 dollars. The AMT exemption for married couples filing jointly will be raised from 82,100 dollars to 83,400 dollars. On the other hand, the maximum Earned Income Credit amount for taxpayers filing jointly with three or more children will be raised 99 dollars, going from 6,143 dollars to 6,242 dollars. The tax exemption for estates of decedents who die will drastically change by 90,000 dollars and rise from 5,340,000 to 5,430,000 dollars. The foreign earned income exclusion will be raised by 1,600 dollars, going from 99,200 dollars to 100,800 dollars. While the annual gift exclusion remains unchanged at 14,000 dollars, the official gift exclusion for gifts to non-citizen spouses will be raised 2,000 dollars up to a total of up to 147,000 dollars.

2015 Tax Exemptions for Businesses
There are major tax exemption changes for businesses because of health care reform. For example, the yearly financial limit on employee contributions to Flexible Spending Arrangements (FSA) will increase by 50 dollars up to 2,550 dollars. Additionally, the small business health care tax credit has various changes for companies. For instance, the maximum credit will be phased out for employers whose total number of full-time employees is at least 10 people. The maximum credit will also be phased out for these employers whose average yearly wages exceed 25,800 dollars per employee. Companies with fewer than 25 full-time employees may qualify for the Small Business Health Care Tax Credit. However, the company must also provide at least half of the health insurance premium costs for their employees and offer coverage through the SHOP Marketplace. Additional, the average salary cannot exceed 50,000 dollars.

Tax Exemption Facts
There are always basic exemption and dependent facts. For example, The IRS’ web-based service is an excellent way to automatically determine the number of exemptions available. Additionally e-file options include using a CPA, commercial software or the Volunteer Income Tax Assistance (VITA) program. Keep in mind that taxpayers can only claim a spouse on a separate return if that person has no gross income, will not file a tax return and will not be claimed as a dependent of another taxpayer. Keep in mind that a dependent can either be a child or a qualifying relative. However, a relative must live with the taxpayer all year round and be directly related, such as a sibling, parent, grandparent or in-law. Most importantly, new health care regulations require that taxpayers report basic health insurance information about themselves and their family members. Specifically, taxpayers must be enrolled in a qualified health insurance plan or have an official exemption.

In the end, individuals and companies should visit the official IRS website in order to review updated revenue bracket tables, income thresholds and associated information.

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